The figure to the right illustrates the causes and effects of international labor mobility between two countries, Home and Foreign (*). The horizontal axis represents the total world labor force. The workers employed in Home are measured from the left, the workers employed in Foreign from the right. The left vertical axis shows the marginal product of labor in Home; the right vertical axis shows the marginal product of labor in Foreign. Suppose the initial allocation of labor has OL³ workers in Home and 0*L³ workers in Foreign. Given this initial allocation, labor can be expected to O A. migrate from Home to Foreign. O B. remain situated where it currently resides. OC. migrate from Foreign to Home. OD. migrate toward the higher nominal wage. From the perspective of the world economy, this migration of labor is desirable since O A. total world output rises by BAC. OB. total world output rises by L²L³DA. OC. total world output rises by DAE. O D. Foreign rids itself of disgruntled workers. MPL D E B MPL 0 Home employment L³ L²L¹ Foreign - Total world labor force 0 employment Q

The figure to the right illustrates the causes and effects of international labor mobility between two countries, Home and Foreign (). The horizontal axis represents the total world labor force. The workers employed in Home are measured from the left, the workers employed in Foreign from the right. The left vertical axis shows the marginal product of labor in Home; the right vertical axis shows the marginal product of labor in Foreign. Suppose the initial allocation of labor has OL³ workers in Home and 0L³ workers in Foreign. Given this initial allocation, labor can be expected to O A. migrate from Home to Foreign. O B. remain situated where it currently resides. OC. migrate from Foreign to Home. OD. migrate toward the higher nominal wage. From the perspective of the world economy, this migration of labor is desirable since O A. total world output rises by BAC. OB. total world output rises by L²L³DA. OC. total world output rises by DAE. O D. Foreign rids itself of disgruntled workers. MPL D E B MPL 0 Home employment L³ L²L¹ Foreign - Total world labor force 0 employment Q

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter18: Gaining From International Trade

Section: Chapter Questions

Problem 3CQ

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